ENVIRONMENTAL PROTECTION AND THE BILATERAL INVESTMENT TREATIES OF MALAYSIA

Abstract

Since the 1990s, globalisation has been a widely accepted concept all over the world. Among the original aims of economic globalisation were to improve the host states' economies and provide benefits to the foreign investors' home countries. Due to the absence of an international treaty in the host states, the Bilateral Investment Treaties (BITs) play a significant role in controlling or regulating the Foreign Direct Investments (FDIs). According to the United Nations Conference on Trade and Development (UNCTAD), different countries have signed 2896 BITs so far, in which, at present, 2361 BITs are in force. As a member of the World Trade Organisation (WTO) and following other states, Malaysia also signed 71 BITs to facilitate the trade, of which 54 are in force at present. Malaysian FDI laws and BITs mainly protect foreign investors. However, most BITs lack the specific provision for protecting the environment. This paper addresses two questions: (a) Do the Malaysian BITs allow the host state to take measures to protect the environment? (b) How could the environment be protected against degradation during the pre-entry stage of FDIs in Malaysia? In this study, the doctrinal research method has been used to critically analyse fifteen BITs, with the aim to find out whether they contain any specific provision regarding the protection of the environment in Malaysia. The findings of this study suggest that the existing Malaysian BITs have provisions to promote and protect foreign investments but have no reference (except the Malaysia-Germany BIT) to the protection of the environment. Therefore, this study recommends that the government of Malaysia should consider inserting a specific provision regarding the protection of the environment in Malaysia while signing any future BITs.